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This week marked the start of a global meeting on climate change in Copenhagen, with nearly 200 nations trying to reach an agreement on this contentious issue. The delegates attending the summit will have until December 18 to discuss things like cuts on greenhouse gas emissions, particularly from big polluters like the United States and China, and aid to poor countries who need help cleaning up pollution that they may not have even created.

Despite several countries, including the U.S., China, Brazil and India, announcing new emissions goals before the summit, some feel that the new targets are not enough to keep global temperatures in check. (Scientists have recommended that temperature increases be capped at 3.6 degrees Fahrenheit above pre-industrial levels.)

The U.S. has laid out a plan to reduce emissions 30% from 2005 levels by 2025, 45% by 2030 and more than 80% by 2050. These numbers are in line with the long-term projections for emissions that scientists have said will avoid the worst affects of increasing climate change.

One of the highly debated issues at the conference is how to verify that poor countries and emerging markets are meeting their emissions-reductions promises. The U.S. is insisting on a fairly comprehensive monitoring program, especially for projects receiving international financing, which India and other emerging markets reject as too intrusive.

The main goal for many in Copenhagen is to set a path to reduce emissions and slow climate change. And some countries, particularly in Europe, want to see the current round of negotiations result in an extension or expansion of the Kyoto accord–major provisions of which expire in 2012–this time involving the United States.

Europe does seem to be approaching the issues in Copenhagen more progressively than the U.S. It was announced that the European Union will contribute about $3 billion starting next year to help poorer countries and emerging markets deal with climate change.

The fund is expected to run over a three-year period, ending in 2012, and could amount to a European contribution of nearly $9 billion in total. That’s a lot of money that will go toward the new technologies needed to help clean up pollution that are being developed in the private sector.

Brendan Coffey, editor of Cabot Green Investor, recently had this to say about the money flowing into the Green sector:

“Private sector spending on Green technologies like wind and solar should rise 35% in 2010 to $135 billion, according to New Energy Finance, a British consultant to Deutsche Bank and the United Nations. Add to that another $60 billion from individual world governments next year, double 2009 levels. Plus, 12 nations, including the U.S. and China, still have $177 billion in approved Green stimulus funding to spend next year and beyond.

“The result is plenty of support for the innovative companies we follow after what has been a relatively austere year in Green investment. Still, to actually have a good shot at keeping our climate within a not-so-dire 3.6 degrees Fahrenheit of pre-industrial times, more dedication to Green is needed. By one estimate, annual spending will need to hit $430 billion a year by 2020 to give the world a 50% chance of hitting that mark.”

I hope some good comes out of the Copenhagen meeting of the minds and that we can meaningfully move forward on this issue. But while politicians and scientists duke it out over what should be done about climate change, what should you be doing?

I’d suggest investing in one of the companies poised to benefit from new legislation and guidelines in the Green sector.

One that seems to be popping up all over is Fuel Systems Solutions (FSYS), which is followed by Cabot Green Investor. Editor Brendan Coffey wrote this when he first recommended the stock in August:

“Fuel Systems Solutions makes the equipment and systems that convert a traditional engine to one that can use CNG, LNG or propane or to an engine that has the option to use either CNG, LNG, propane, diesel or gasoline on demand.

“Fuel Systems grew out of a 50-year-old California company called Impco, which focused on industrial equipment and stationary power, and combined last decade with Italian competitor BRC, which focused on light vehicles.

“Fuel Systems sells to the aftermarket for individuals or companies that want to convert existing engines to use natural gas, and to the original equipment market (OEM), tweaking automakers’ cars and trucks to use CNG or LNG before they are delivered to dealers. … Whether OEM or aftermarket, conversion work involves adding equipment under the hood and replacing or installing additional fuel canisters that store the alternative fuel. Fuel Systems customers include Fiat, Opel, Ford and many other major automakers, none of which account for more than 10% of revenue.

“The company has manufacturing facilities in California and northern Italy, and maintains sales offices in the major CNG and LNG consumer regions, Europe, Australia, India and Pakistan chief among them. In Pakistan, for instance, the relative cheapness of natural gas versus oil means only the elite have cars running on gasoline. In Europe, a desire to reduce air pollution steers consumers to natural gas, as does the European union mandate to get 20% of all vehicles running on fuels other than petrol or diesel.

“The big story for Fuel Systems is the potential of the American market. About 80% of revenues each of the past three years have come from outside the United States … a potential boon is a bill introduced by Senate majority leader Harry Reid of Nevada to provide tax incentives to buyers of natural gas vehicles, a plan that has gotten a lot of vocal support from oilman T. Boone Pickens, who owns the majority of natural gas fueling station chain Clean Energy Fuels.

“The bill would boost the tax incentive to natural gas vehicles to as much as $12,500 per vehicle and to $100,000 for natural gas fueling stations. The bill is certain to pass, if the number of its co-sponsors (77) is a reliable indicator, although it may not be addressed until after health care in September. The House of Representatives passed a bill earlier this summer authorizing $150 million to research natural gas vehicles.”

The stock has had a great four weeks after posting excellent quarterly results, and has pulled back to its 50-day moving average in the past two days, so Brendan is urging caution for now. However, Fuel Systems Solutions is bound to benefit from the push for lower greenhouse gas emissions and a focus on alternative energy, so I’d put it on your Watch List. If you want Brendan’s full recommendation, plus continuous updates on FSYS and other Green stocks, check out Cabot Green Investor. It’s the #1 source for Green sector investments that are poised to explode as climate change becomes an even hotter topic. Click below to find out more.

In case you didn’t get a chance to read all the issues of Cabot Wealth Advisory this week and want to catch up on any investing and stock tips you might have missed, I have links below to each issue.

Cabot Wealth Advisory 12/7/09 – Healthcare Feedback from Readers

On Monday, Timothy Lutts printed some of the best feedback he received from his column on healthcare last week. Tim also discussed three U.S. industries that are experiencing lots of progress. And he finished by writing about a stock that’s bound to benefit from the progress in the Green energy sector. Featured stock: Cree Inc. (CREE).

On Thursday, Michael Cintolo wrote about 10 tips for your investing toolkit that can help put you on the path to investment success. Mike also discussed his favorite investment books–perfect holiday gifts for the investors on your list. Mike also wrote about one of his favorite growth stocks. Featured stock: American Superconductor (AMSC).

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Market Update

From Cabot Top Ten Trader

To say it’s been a topsy-turvy week has been an understatement. The rotation that we started to pick up on a couple of weeks ago was unleashed late last Friday and the first couple of days of this week, with just about any stock and sector that’s enjoyed a good run this year coming under pressure—including more than a few names that flashed abnormal intermediate-term action. Right now is basically the definition of an environment where you should take things on a stock-by-stock basis. If your loss limits are tripped, sell. If a decent winner you had is back to breakeven, put in a tight stop. And if you have a good-sized winner that’s tripped its stop, sell at least some of your shares, if not all.